RBS share price: Group rejects calls to beef up SMEs compensation scheme
Bailed-out lender admits to some wrongdoing over handling small business clients
Royal Bank of Scotland Group (LON:RBS) has rejected calls to beef up its £400-million scheme to reimburse small business customers claiming that they were mistreated by the bank’s business restructuring division. The move came as MPs questioned the amount the bailed-out lender has set aside as it admitted some wrongdoing over the handling of small businesses by its Global Restructuring Group (GRG) division.
RBS’ share price has inched marginally higher in London this morning, having added 0.04 percent to 233.20p as of 08:24 GMT. The stock is slightly underperforming the broader London market with the benchmark FTSE 100 index currently standing 0.59 percent higher at 7,272.21 points. The group’s shares have gained just under four percent this year, as compared with a near two-percent rise in the Footsie.
Reuters quoted Andrew Tyrie, chair of the parliament’s Treasury Select Committee, as asking RBS whether the £400 million it has set aside to compensate small business customers was too low because a customer action group planning to sue the bank already has claims worth £2 billion. The bailed-out lender’s chief executive Ross McEwan, however, said that the money was to repay sales charges which should have been explained more clearly, and was not intended to repay large numbers of customers who believed that the group’s GRG division had caused their businesses to fail.
“It is highly unlikely that businesses suffered material financial distress as a result of the bank’s actions,” McEwan said in a letter to Tyrie.
The correspondence marks the latest twist in the GRG saga, which started in 2013 when Lawrence Tomlinson, an adviser to the former Business Secretary, published a review, claiming that RBS had forced small company clients out of business to acquire their assets on the cheap.
As of 08:50 GMT, Friday, 10 February, Royal Bank of Scotland Group share price is 232.80p.
View on Invezz website10